Bryan Caplan and David Henderson

November 2010

A Monthly Archive (129 entries)

Housing Finance Reform

Finance: stocks, options, etc.
Arnold Kling
Kevin Villani writes, The systemic failure of 2008 reflects the accumulated distortions of the political response to past failures with political causes. Portfolio lending savings and loan associations, the traditional backbone of the US housing finance system, were forced to... MORE

The Politics and Economics of Julian Assange

Politics and Economics
Bryan Caplan
From Forbes' interview with Wikileaks editor Julian Assange:Would you call yourself a free market proponent? Absolutely. I have mixed attitudes towards capitalism, but I love markets. Having lived and worked in many countries, I can see the tremendous vibrancy in,... MORE

Illegal immigrants are one of the few groups that modern Americans openly despise.  Indeed, most people can't even say "illegal immigrants" without sneer italics.  Illegal immigrants are also one of the few groups that effectively can't sue their employers for... MORE

The Non-TARP Bailout

Finance: stocks, options, etc.
Arnold Kling
Peter Wallison and Ed Pinto write, While everyone has been watching Fannie and Freddie, the administration has quietly shifted most federal high-risk mortgage credit initiatives to FHA, the government's original subprime lender. Along with two other federal agencies, FHA now... MORE

The Phillips Curve as a Straight Line

Macroeconomics
Arnold Kling
In an attempt to view macroeconomics through a 1970 lens, I decided to model the Phillips Curve as a simple linear trade-off, using the period 1956-1968. In those years, the inflation rate averaged 2.19 percent and the unemployment rate averaged... MORE

Admiral Mullen vs. Professor Hayek

Central Planning vs. Local Knowledge
David Henderson
I mentioned briefly in a comment on my own blog post a few weeks ago that there is a Hayekian approach to protecting ourselves from terrorists. I elaborated in an article yesterday that I'll quote from here: Friedrich Hayek's insights... MORE

Greens, The Road, and Left Behind

Energy, Environment, Resources
Bryan Caplan
When I watched The Road, it seemed nearly apolitical.  At the most abstract level, you could take it as a defense of Hobbes against Locke.  But it's hard to see how liberals, conservatives, libertarians, or anyone else would see it... MORE

Jeffrey C. Fuhrer wrote in a 1995 article entitled, "The Phillips Curve is Alive and Well." Overall, then, conventional tests of the stability of the Phillips curve indicate remarkable stability. There may be no other macroeconomic relationship that could perform... MORE

Price Controls and Black Markets in Canadian Health Care

Economics of Health Care
David Henderson
One high-ranking physician who works with doctors at several Montreal hospitals told The Gazette that obstetricians often accept cash offered by expectant parents to ensure their doctor attends the delivery, rather than having to depend on whichever doctor is on... MORE

Grisly Statistical Discrimination in The Road

Information Goods, Intellectual Property
Bryan Caplan
Last night I saw The Road, a truly bleak post-apocalyptic movie.  [Warning: Minor spoilers.]  As I watched, I realized that I was witnessing a mighty counter-example to my views on the propriety of statistical discrimination.  In the movie, about 80%... MORE

Roger Cohen on TSA

Regulation
David Henderson
New York Times columnist Roger Cohen has an excellent column pointing out the real issue with TSA, naked pictures, and groping. In a column aptly titled, "The Real Threat to America," Cohen writes: I don't doubt the patriotism of the... MORE

The Stages of Libertarian Denial

Economic Philosophy
Bryan Caplan
Libertarians set themselves apart from other political thinkers by habitually denying that government should do things.  Denial is therefore at the heart of libertarian thought.  Thanks to pop psychology, unfortunately, "denial" has come to mean "refusing to admit the truth"... MORE

The County Where I Live

Politics and Economics
Arnold Kling
The Washington Post editorializes, In other localities, officials have taken a more matter-of-fact approach to painful cost-cutting, including layoffs, furloughs and salary freezes. In Montgomery, where unions boast openly about their ability to install and remove the very elected officials... MORE

Macroeconomics with Diffuse Priors

Economic Methods
Arnold Kling
Below, I elaborate on two claims. 1. Macroeconometrics requires the imposition of prior beliefs. 2. If one has diffuse prior beliefs, the correct macroeconomic policies are not easily formulated.... MORE

Will Eisner's The Plot

Books: Reviews and Suggested Readings
Bryan Caplan
I've repeatedly heard that the infamous Protocols of the Elders of Zion is a forgery.  But it was only in reading Will Eisner's The Plot that I came to understand the kind of forgery it is.   Protocols was proven to... MORE

The Suffering of Mortgage Borrowers

Finance: stocks, options, etc.
Arnold Kling
The Wall Street Journal reports, The average borrower in the foreclosure process hadn't made a payment in 492 days as of the end of October, according to LPS. That compares to 382 days a year ago and a low of... MORE

Caplan-Miller in the WSJ

Behavioral Economics and Rationality
Bryan Caplan
The Wall St. Journal carefully summarizes our work on IQ and economic beliefs: The authors found that intelligence supplanted education as the primary predictor of whether one took an economist's typical point of view. Education moved into second place, followed... MORE

David Friedman on TSA

Regulation
David Henderson
David Friedman asks how we can trust TSA when it has shown itself untrustworthy. He gives two examples: To take the earliest and most striking example, the TSA used to, for all I know still does, interpret the rule against... MORE

Macroeconomics, Circa 1970

Macroeconomics
Arnold Kling
According to Prad Krulong, macroeconomists had it and then lost it. They lost it some time after 1970. We had this magic formula, call it M70, and somehow we let it slip from our collective memory. But what was M70?... MORE

Betting Stakes and Julian Simon

Energy, Environment, Resources
David Henderson
When writing my previous post on my own experience with stakes in betting, I couldn't find a bet that I had thought I offered. Now I have. In a Red Herring article in June 1998, at http://www.davidrhenderson.com/articles/0698_inmemoriamjuliansimon.html, "In Memoriam: Julian... MORE

Tools and Objectives

Monetary Policy
David Henderson
Let's say I notice that a screw is loose on a handle of a pot. This often happens with one particular old pot we have that we love. So I go get a Phillips screwdriver and tighten the screw. Would... MORE

The State of the European Crisis

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen writes, In a nutshell, we're watching the most pitched, highest-stakes, most determined battle between politics and finance which has been staged. I am expecting finance to win. The question is whether the Eurocrats can beat back the speculators.... MORE

Sociology and Signaling

Economics and Culture
Bryan Caplan
Back in 1995, I attended an IHS seminar for graduate students.  We heard some lectures, practiced our public speaking, and did mock interviews.  The last activity was pretty traumatic.  It's hard for a second-year grad student to role-play someone who's... MORE

What I'm Reading

Books: Reviews and Suggested Readings
Arnold Kling
The Emperor of All Maladies: A Biography of Cancer, by Siddhartha Mukherjee. I am less than half-way through. This one deserves its place on top book lists (such as this one). So far, I think it gives The Rational Optimist... MORE

Commenting on my post where I questioned the charitable value of donations to organizations of policy wonks, he wrote: Give a man a fish, he'll eat for a day. Teach him to take fish from others, ...... MORE

Me on Economists and the Draft

Labor Market
David Henderson
Last week, Larry White interviewed me on the role of economists in ending the draft. It's now on-line. What led to the interview is this article that Econ Journal Watch published in 2005. Aside from my heavy breathing in places,... MORE

Raising the Stakes

Energy, Environment, Resources
David Henderson
There's a lot of discussion on this blog on raising the stakes. For the record, I offered to bet Paul Krugman $1,000, in a Simon-Ehrlich kind of bet, on the future price of oil. He didn't respond. (See http://www.davidrhenderson.com/articles/0297_isthereanewdigital.html and... MORE

The Park Ranger, Stability, and Resilience

Economic Education
Arnold Kling
From Ashwin: The relevant insight in Holling's work is that resilience and stability as goals for an ecosystem are frequently at odds with each other. In many ecosystems, "the very fact of low stability seems to produce high resilience". Conversely,... MORE

Thoughts on Charity

Political Economy
Arnold Kling
Ezra Klein thinks that political organizations are worthwhile charities. If you donate money to a food bank, it can provide only as much food as your money can buy. If you donate it to a nonprofit that specializes in food... MORE

Why Not Raise the Stakes?

Economic Methods
Bryan Caplan
In the comments, rapscallion poses an interesting challenge:The bets I've seen placed on this site are so small in value that they don't tell me much other than that none of the bloggers believe in anything with much certainty. A... MORE

The Park Ranger Metaphor, Further Continued

Political Economy
Arnold Kling
Here are some responses to comments on my original post and the follow-up. Again, the idea is that the park ranger represents someone who is not convinced that he or she can improve on the natural rain forest, despite what... MORE

Arnold Kling, Noble in Defeat

Economic Methods
Bryan Caplan
Today I cashed my victory check from my election bet with Arnold Kling.  Now it's time to honor him.  Not only did my esteemed co-blogger promptly pay up; he had the courage and honesty to publicly bet in the first... MORE

Not Who You Think

Politics and Economics
Arnold Kling
1. Not Mencius Moldbug: But a king--a king without any real power, that is--is such an ennoblingly arbitrary, such a tender and organically human institution. It is easy to give our loyalty to someone whose only claim on it is... MORE

Cliches of Anti-Pacifism

Economic Philosophy
Bryan Caplan
I'm a pacifist.  I realize that it's an unpopular position, but I'm still surprised by how quick people are to dismiss the position with cliches.  Here are three of the most common.1. "If you want peace, prepare for war."  This... MORE

INET Will Not be New

Economic Education
Arnold Kling
A press release from the Institute for New Economic Thinking: Led by INET's Executive Director Dr. Robert Johnson, the outreach program has already reached six institutions of higher learning, and has included presentations and discussion from INET Advisory Board members... MORE

Last Stand of the WORST

Politics and Economics
Arnold Kling
In an earlier post, I described the 2010 election as the last stand of the white, older, rural and small town voters. Now, the Washington Post reports, The Republican Party's big gains in the House came largely from districts that... MORE

Park Ranger, Continued

Economic Methods
Arnold Kling
My earlier post drew a number of helpful comments, including one from Karl Smith on his own blog. it is right that take the knowledge of market failure that we have and do what we can to alleviate what suffering... MORE

In Defense of Supernanny

Family Economics
Bryan Caplan
I discovered Supernanny when my sons were infants.  I watched in disbelief when Jo Frost reformed monstrous children simply by putting them in "the naughty corner."  But once our infants became toddlers, we gave the naughty corner a try.  To... MORE

TSA: Totally Subjugating Americans

Regulation
David Henderson
I've been working on what TSA really stands for and the title above is the one I've narrowed in on. I'd be interested in hearing yours. A few developments. First, TSA has backed down on groping or taking nude pictures... MORE

The Park Ranger and the Museum Curator

Economic Methods
Arnold Kling
Below is a metaphor I am working on. Feel free to comment.... MORE

Political Morality and the SS Trust Fund

Social Security
Arnold Kling
John Holbo writes, it's perfectly reasonable to worry about how the US is ever going to manage to pay for stuff it needs/wants. But accusing the Social Security Trust Fund of being a mere accounting fiction does not 1) do... MORE

Austrians and hard-core libertarians usually jointly dismiss monetary and fiscal policy.  But among more moderate economists, there's a long-standing tendency for pro-market views to correlate with a preference for monetary over fiscal policy.  Friedman and Samuelson are the classic examples:... MORE

More on What Technology Wants

Books: Reviews and Suggested Readings
Arnold Kling
Russ Roberts is also a fan of Kevin Kelly's new book. I still have not finished, but it continues to be interesting. One aspect is that an invention goes through a life cycle. At first, it is "stuff that does... MORE

TSA's Phony Choice

Politics and Economics
David Henderson
This is from an article in yesterday's Wall Street Journal. The "he" referred to is John Pistole. [Ayn Rand was accused of overdoing it when she used less-obvious names for villains.] "If you have two planes, one where people are... MORE

Fade-out, Teacher Quality, and Summer Learning Loss

Economics of Education
Bryan Caplan
Getting students to learn is hard.  One of teachers' favorite consolations, though, is that "If I can just get through to these kids, it will all be worth it."  The hope, apparently, is that successful teaching will permanently changes students'... MORE

More on Fox News

Information Goods, Intellectual Property
David Henderson
Because I found Daniel Kuehn's latest comment on my previous post mainly on-target, but I also realize that many people don't read too far into the comments, I want to add this paragraph from another piece I wrote, "The Wayback... MORE

The Politics of the Mortgage Interest Deduction

Politics and Economics
Arnold Kling
Ed Glaeser is naive. He writes, Wyden-Gregg option is to limit the mortgage deduction to exclude second homes, home equity lines, and mortgages over $500,000. Lowering the upper limit on the home mortgage interest deduction should appeal to progressives, who... MORE

One and a Half Cheers for Fox News

Information Goods, Intellectual Property
David Henderson
Senator Jay Rockefeller made a splash Wednesday by suggesting that the Federal Communications Commission shut down the Fox News Channel and MSNBC. My guess is that he mentioned MSNBC because he wanted to sound equally oppressive of both left and... MORE

Voucherization of Medicare

Economics of Health Care
Arnold Kling
The Washington Post reports, President Barack Obama's deficit commission on Wednesday debated a dramatic plan to gradually turn Medicare from a system in which the government pays most beneficiaries' medical bills into a program in which seniors would purchase health... MORE

Heilbroner on Forced Labor

Labor Market
David Henderson
Bryan's various posts [here's one--the rest are easy to find with the Search function] on Eugene Richter's dystopian novel, Pictures of the Socialistic Future, persuaded me to read the book. I think Bryan nailed it in his Foreword in saying... MORE

What I Learned From the Crisis

Monetary Policy
Bryan Caplan
At yesterday's lunch, Tyler asked us to name the most important lesson we learned from the crisis of 2008.  My answer: The Fed is much worse than I thought.  I used to think we could trust an economist of Bernanke's... MORE

Monetary Policy: Giving and Buying

Monetary Policy
David Henderson
In discussions of monetary policy, I've noticed that some discussants fail to note the distinction between giving and buying. A young colleague asked me recently: If you're trying to use monetary policy to increase aggregate demand, isn't it better to... MORE

The Sumnerian Missionary

Monetary Policy
Bryan Caplan
Scott Sumner's written an impressive open letter to conservatives on quantitative easing.  The conclusion is particularly good:I don't think conservatives realized it at the time, but I (and a few other quasi-monetarists) had the strongest argument against fiscal stimulus in late... MORE

The Economy the American Curriculum Prepares You For

Economics of Education
Bryan Caplan
A common argument in favor of American education is that it exposes students to a wide variety of career options.  How are kids supposed to decide their course in life if they don't know their choices?  Unfortunately, this argument has... MORE

Seeing Like a Central Planner

Central Planning vs. Local Knowledge
Arnold Kling
Mike Konczal writes, The government's workforce is more educated than the private workforce. For instance, the government's "college plus" level is 54%, while all private workforce is 35%. "Some college" is 14% of government workers, 19% of the private workforce.... MORE

Books of the Year?

Books: Reviews and Suggested Readings
Arnold Kling
Tyler Cowen gives us his list. The only one I have read, Max Hastings' Winston Churchill's War, I found not so interesting. In fact, the 2010 crop of books did not produce many keepers, from my perspective. Matt Ridley's The... MORE

The Science of Success

Family Economics
Bryan Caplan
Normal 0 MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman";} My editor at Die Welt Am Sonntag just gave me permission to share the... MORE

Ich Auf Deutsch

Family Economics
Bryan Caplan
Die Welt Am Sonntag ran my first German-language article a couple weeks ago.  It's an original piece, written by me in English, and translated by their staff.  Some highlights in English: Normal 0 MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table... MORE

Abolish the TSA

Central Planning vs. Local Knowledge
David Henderson
Art Carden has an excellent article on Forbes.com in which he advocates abolishing the TSA. I give a segment on this in my econ class when I discuss, at length, Hayek's "The Use of Knowledge in Society." How does Hayek's... MORE

What Technology Wants

Institutional Economics
Arnold Kling
That is the title of Kevin Kelly's new book. I am only about one-fifth into the book, but I wanted to share an excerpt on the topic of slums. San Francisco was built by squatters. As Rob Neuwirth recounts in... MORE

Maryland's State Pension Blues

Public Choice Theory
Arnold Kling
The Examiner reports, State teacher pension payments will grow 10 percent annually and its benefits contributions will grow 8 percent annually, while General Fund revenues -- responsible for all teacher pensions and 60 percent of benefits -- will increase only... MORE

Television Defended

Family Economics
Bryan Caplan
My colleague Russ Robert's not impressed by my claim that T.V. is great for the family.  My three main arguments, to refresh your memory:1. Television is fun.  I don't want my son to miss out on one of life's great... MORE

I Agree: Budget Cutting is Easy

Fiscal Policy
David Henderson
Like Arnold and some of his commenters, I found it way easier than I thought it would be to cut the federal budget on the New York Times' interactive site. After I was done, the Times announced that I had... MORE

The Shifty Economy

Growth: Causal Factors
Arnold Kling
John Hagel writes, the Shift Index focuses on return on assets (ROA) for all public companies in the US since 1965. The bottom line: ROA has collapsed by more than 75% over this period. Thanks to Patri Friedman for the... MORE

Portrait of an Elitist

Energy, Environment, Resources
Arnold Kling
In today's business section, the Washington Post profiles energy secretary Steven Chu. Aides say Chu's ability to understand and absorb technical information sets him apart from the previous 11 energy secretaries... "People don't appreciate what's going on," he says, "that... MORE

Can I Have My Prize Now?

Fiscal Policy
Arnold Kling
I played the deficit reduction game at the New York Times. I stopped playing when I had already eliminated the 2030 deficit without raising taxes. The choices that did the most for me were capping Medicare growth after 2013 (I... MORE

Posing the Macroeconomic Question

Macroeconomics
Arnold Kling
Brad DeLong writes, All five of these theories are best taught sympathetically by being taught historically: as long traditions of thought that smart people have used to try to understand a changing and confused world. Thus Minskyism from its nineteenth... MORE

Health Care and Socialist Calculation

Economics of Health Care
Arnold Kling
Uwe E. Reinhardt writes, Soviet label notwithstanding, the relative fee structure underlying the Medicare fee schedules imposed in 1992 -- the so-called "resource-based relative value scale" -- has by now been widely adopted by many private health insurers in the... MORE

Deficit Reduction and Tax Policy

Tax Reform
Arnold Kling
Mark Thoma writes, Why, for example, are tax cuts included in a proposal to reduce the national debt? That makes no sense at all except as an attempt to impose a particular ideology on the tax code. For decades, economists... MORE

Deficit Reduction Politics

Politics and Economics
Arnold Kling
Steve Teles writes, The party base has significantly more leverage over elected officials in the Republican than the Democratic party. The chance of being successfully "primaried" if you are a Democrat is low, and in any case there is not... MORE

Two Strains of Conservatism

Political Economy
Arnold Kling
I found this Jonah Goldberg interview worthwhile. It's three hours! This is from a show where listeners could call in. Goldberg's adversaries strike me as petty. I don't think they raise issues with his views of the relationship between progressivism... MORE

Speaking of the Fed...

Economic History
Arnold Kling
George Selgin, William D. Lastrapes, and Lawrence H. White have a long paper comparing economic performance before and after the Fed was created. They make a strong case that performance has not improved. I think this history is well worth... MORE

Bad Argument for the Fed

Monetary Policy
David Henderson
In a recent Slate article critical of returning to the gold standard, Christopher Beam writes: The creation of the Federal Reserve in 1913 didn't stop fiscal crises, of course, but it did a lot to reduce their damage. I'm not... MORE

Random Thoughts on the Bowles-Simpson Plan

Fiscal Policy
Arnold Kling
Washington Post story starts here. One quote: The Bowles-Simpson blueprint would leave in place the vast expansion of health-care coverage enacted this year, rejecting GOP calls to repeal "Obamacare." 1. This is the huge carrot that Bowles-Simpson offers to Democrats.... MORE

My Big Fat Consumer Surplus

Cost-benefit Analysis
David Henderson
My original idea for this post was to share my intense happiness at getting my computer fixed quickly. Then I realized that what's really going on is that I got huge consumer surplus. I'll tell you my story and then... MORE

Deficit Commission Co-Chairs' Draft

Fiscal Policy
Arnold Kling
The powerpoint is here. Thanks to Greg Mankiw for the pointer. Lots of tax reform (get rid of the mortgage interest deduction, the health care deduction), and no VAT. Cuts in Social Security benefits, but trying to maintain benefits for... MORE

Public Choice for Children

Public Choice Theory
David Henderson
Out of the mouths of babes oft times come gems. In "Obama Visits a Nation that Knew Him as Barry," November 8, the New York Times, uncharacteristically given the subject, has a revealing story about an interaction between Barry Obama... MORE

Good Sentences

Political Economy
Arnold Kling
from Steve Randy Waldman: To DeLong, Robert Rubin remains a pontiff of the "bipartisan technocrats". To the rest of us, Rubin has become an icon of self-delusion, corruption, and arrogance. There is more, in what Tyler Cowen calls "The best... MORE

Drug War Debate Bleg

Regulation
Bryan Caplan
The GMU Econ Society wants me to debate the drug war in the spring, but I can't think of any decent debating partners.  The ideal opponent is a smart, civil, high-status prohibitionist who lives in the DC area.Your suggestions?... MORE

China, India, and Maoist Apologists

Cross-country Comparisons
Bryan Caplan
I do not reply to email from Nazi or Communist apologists.  I don't even write back to say, "I refuse to dignify your email with a response," because that would be a response.  I regard the defenders of totalitarianism as... MORE

Budget Myths and Reality

Social Security
Arnold Kling
This paper on the long-term budget outlook was just released. My guess is that I will refer to it often in the future. I encounter a number of arguments that purport to explain why we do not have to restructure... MORE

All the Devils are Here

Books: Reviews and Suggested Readings
Arnold Kling
Alex Tabarrok likes the book. My review was also very favorable.... MORE

Why T.V. is Great for the Family

Family Economics
Bryan Caplan
Yesterday my baby acquired a valuable life skill: He learned how to watch television.  I'm thrilled for at least three reasons:1. Television is fun.  I don't want my son to miss out on one of life's great pleasures.2. Television is... MORE

Philosophical Correlations

Economic Philosophy
Bryan Caplan
Public opinion research on philosophers was long in coming, but the results have been worth the wait.  Here are a bunch of tables summarizing the correlations between philosophers' positions.  Some are surprisingly low considering that they're near-tautological.  "Moral judgment: cognitivism"... MORE

Labor Quality and Multiplicative Growth

Growth: Causal Factors
Bryan Caplan
I'm open to the possibility that variables besides policy, population, and science belong in a multiplicative growth model.  But labor quality - the variable that Clark emphasizes in A Farewell to Alms - just isn't very important.  Sure, you can't... MORE

In a recent article, Bob Murphy responds to my statement that counting the interest cost on the debt generated by war spending is not justified. I argued that it's double counting and that the initial outlay is the correct measure... MORE

Here's Greg Clark on growth over at Cato Unbound:I fully agree with McCloskey about the surprisingly poor ability of incentives alone to account for growth. In order to hold on to the central idea that the 10,000-year delay in the... MORE

Ozimek's Challenge to Paternalists

Economic Philosophy
Bryan Caplan
Is paternalism a slippery slope or not?  People like Thaler insist that it's not.  Adam Ozimek ingeniously explains why disbelievers keep missing the evidence that the slippery slope is all too real.  Evidence like... San Francisco's ban on the Happy... MORE

Rare Agreement?

Finance: stocks, options, etc.
Arnold Kling
one cannot defend the actions of Team Obama on taking office. Law, policy and politics all pointed in one direction: turn the systemically dangerous banks over to Sheila Bair and the Federal Deposit Insurance Corporation. Insure the depositors, replace... MORE

Scott Sumner Explains Himself

Macroeconomics
Arnold Kling
First, he writes, I see a three step process. A monetary shock (money supply or demand) causes flexible asset prices to change immediately (stocks, commodities, exchange rates, etc.) This causes output to rise, and consumer prices and wages respond with... MORE

I'm all in favor of speculation on questions where the data are unclear or non-existent.  But if excellent data exists on a question of interest, we should consult it.  The General Social Survey has been asking Americans "Do you think... MORE

Group-Serving Bias: Bloodlands Edition

Behavioral Economics and Rationality
Bryan Caplan
Bloodlands documents the most horrifying single example of group-serving bias I've ever read.  Fair warning: This is not for the faint of heart.In October 1941, Mahileu became the first substantial city in occupied Soviet Belarus where almost all Jews were... MORE

Latest Employment Data

Labor Market
Arnold Kling
After a report showing a gain of 150,000 jobs last month, Mark Thoma says that the glass is half empty. it could have been worse, but in past recoveries we've had job growth of hundreds of thousands, far more that... MORE

Milton Friedman and the Phillips Curve

Macroeconomics
Arnold Kling
I have agreed to write something on the history of the Phillips Curve, so I may post on the topic from time to time. The heyday of the Phillips Curve was 1956-1969. In that fourteen year period: --unemployment was below... MORE

The Mixed Blessing of Price Discrimination

Information Goods, Intellectual Property
Arnold Kling
Gabriel Rossman gives an excellent explanation of price discrimination in the context of cable TV bundling. He writes, A switch to a la carte will probably result in an increase in consumer surplus per unit demanded but a drastic decrease... MORE

Who is a Middle American?

Labor Market
Arnold Kling
Both Joel Kotkin and David Brooks seem to be struggling with this issue. They agree that middle America is in trouble. But who are we talking about? Kotkin writes, Since Obama's inauguration all the economic statistics vital to their lives--job... MORE

The U.S. Postwar Miracle

Fiscal Policy
David Henderson
In the Encyclopedia, I wrote about the German economic miracle. In this piece, "The U.S. Postwar Miracle," just released by Mercatus, I write about the miracle that was right under our noses or, more exactly, right under our parents' and... MORE

Noontime Concert at Pepperdine, Nov. 18

Upcoming Events
Arnold Kling
The topic will be themes from Unchecked and Unbalanced. The location will be room 175 of the School of Public Policy. Look here for the Drescher College map or the full campus map. If I had known that I would... MORE

My Sexism

Behavioral Economics and Rationality
Arnold Kling
David points to an example in which Madeleine Albright is willing to see Iraqi children die, presumably because of American policy. That may be cruel, but it is not an example of the pathology that I was describing. What Angelo... MORE

The Long Last Stand

Politics and Economics
Bryan Caplan
Arnold cites Karl Smith's "demographic data that support my last-stand-of-the-WORST pre-mortem of the election."  But even on a naive extrapolation of Karl's data, this "last stand" will last decades:Democrats only won the two youngest age brackets.  In twenty years, they'll... MORE

Counterexample on Female Pathology

Cost-benefit Analysis
David Henderson
In an excellent post earlier today, co-blogger Arnold, discussing "Suits vs. Geeks" in the financial industry, writes: I don't think female executive minds are as capable of the same pathology. That's crying out for a counterexample. Here's mine. Listen to... MORE

A Must-Read on Social Security

Books: Reviews and Suggested Readings
Arnold Kling
A Well-Tailored Safety Net should be read by every policy wonk or would-be wonk who is focused on the long term fiscal outlook in general and on Social Security in particular. There are two reasons to read it. 1. Author... MORE

Three that Caught My Eye

Economics of Education
Arnold Kling
1. William Easterly on the $320,000 kindergarten teacher story. Under the project studied, there were random assignments of teachers and students to classes. The striking thing in the findings is the identification of "Good" and "Bad" kindergarten classes, as shown... MORE

Who Said It?

Behavioral Economics and Rationality
Bryan Caplan
This view of democracy is less cheery than the romantic alternatives, and thus less appealing. Its skepticism raises a host of new questions. And it may impose an obligation on those who propound it to make normative sense of the... MORE

Meet the Suits

Books: Reviews and Suggested Readings
Arnold Kling
You simply must make room on your financial crisis porn bookshelf for the forthcoming All the Devils are Here, by Bethany McLean and Joe Nocera. The worst financial crisis books, such as David Wessel's undeservedly popular tripe, focus their narrative... MORE

Warren Nutter: A Reminiscence

Central Planning vs. Local Knowledge
David Henderson
Waking this morning and seeing co-blogger Bryan's excellent post on Warren Nutter led me to recall his importance in my intellectual life. In academic year 1970-71, I took a year off after graduating from college (in Canada, we said "graduating... MORE

The Fed's new policies are arguably as important as the election itself.  How can we explain the timing?  There are two main families of hypotheses:Family #1: The election changed the minds of Bernanke and company.Family #2: Bernanke and company made... MORE

Nutter Russia

Cross-country Comparisons
Bryan Caplan
Warren Nutter (1923-1979) was a prescient detractor of the Soviet economy.  Only today, though, did I learn (through my colleague David Levy) that Nutter actually toured the USSR in 1956 - and shared his observations in U.S. News and World... MORE

The Strangest Macro Model Ever

Macroeconomics
Arnold Kling
I think that I usually understand what Paul Krugman is saying, even when I disagree with him. However, I do not think that I understand Why Inflation Targets Need to be Higher well enough to say whether or not I... MORE

Roosevelt and Retrospective Voting

Behavioral Economics and Rationality
Bryan Caplan
I just finished V.O. Key's 1966 classic, The Responsible Electorate.  It's a seminal work in the retrospective voting literature.  Key tries to convince his fellow political scientists that democracy works well because the electorate rewards success and punishes failure.  He's... MORE

Exit Polls

Politics and Economics
Arnold Kling
I find these fascinating. Note that this link takes you to the first of four pages. These are for House races. It seems that of those who were polled, 46 percent recalled voting for Obama in 2008 and 45 percent... MORE

Yesterday I presented two explanations for the Democrats' loss of the House:1. Retrospective voting model.  They're being punished for two years of bad economic performance.2. The median voter model.  They're being punished for being well to the left of public... MORE

Earl Long on Not Voting

Public Choice Theory
David Henderson
I have friends who refuse to vote because their vote doesn't matter. I understand that. I have friends who make voting a moral issue and say it's wrong to vote. I kind of understand that. But what I don't get... MORE

Me and the Elephants

Political Economy
Arnold Kling
I like this talk a lot, particularly since right afterward I did not think it had gone well. This was the talk where I thought that I was speaking to backers of the Republican establishment, and what I told them... MORE

If Government Were a Rich Man

Political Economy
Arnold Kling
Wintercow20 writes, The US government (all levels) has 20% more resources itself than the largest economy in the world does yet it cannot take care of health care for the poor and chronically infirm? Where on the list of priorities... MORE

Russ Roberts and John Papola are at it again. They are interviewed after the rapping (they are not the rappers), and I like the way Papola scorns the GDP factory.... MORE

What Could Go Wrong?

Monetary Policy
Arnold Kling
Suppose Scott Sumner or his evil twin took over the Fed. The Fed would try to create expectations of returning nominal GDP back to trend relatively soon. These expectations would hit financial markets before they hit goods markets. They will... MORE

Demographics and my Pre-Mortem

Politics and Economics
Arnold Kling
In response to Bryan's pre-gloat, some commenters seem to suggest that demographics are over-rated as an electoral force. You might want to look at Red States and Blue Cities. William Easterly comments, We now see that there are really no... MORE

Election Pre-Mortem

Political Economy
Bryan Caplan
There are two standard social science stories about the Democrats' impending humiliation:1. Retrospective voting model.  They're being punished for two years of bad economic performance.2. The median voter model.  They're being punished for being well to the left of public... MORE

Pre-Gloat

Politics and Economics
Bryan Caplan
Tomorrow is my first of ten chances to win my bet against one-party democracy with Arnold:Republicans will regain control of at least one branch of the federal government at some point between now and January 20, 2017 (two inaugurations from... MORE

The Technofuture

Growth: Causal Factors
Arnold Kling
Christian H. Nesheim asks folks which technology will have a big impact over the next twenty years. A sample response: But from an ethical perspective, I think the single most important technological development will be the mass-production and consumption of... MORE

Me in The Economist

David Henderson
The latest Economist has an article that highlights, among other things, my recent piece for Mercatus on how the Canadian government turned around its budget mess in about 10 years from the mid-1990s to the mid-2000s. An excerpt from my... MORE

A Subtitle to Ponder

Finance: stocks, options, etc.
Arnold Kling
A Home Without Equity Is Just a Rental With Debt. It comes from an analysis written in 2001 (!) by Wall Street economist Josh Rosner. Read the whole thing, but keep in mind that many of us believe that the... MORE

Two Events

Upcoming Events
Arnold Kling
1. Sick and Sicker, a documentary about health care policy, is now available. I was interviewed, but I think I won't appear until the sequel. 2. Celebrity Death Match featuring Paul Ryan and David Brooks, with the latter defending big-government... MORE

Helpful Illusions

Behavioral Economics and Rationality
Bryan Caplan
While I think we have a duty to believe what is true, it's possible for widespread errors to have good consequences.  Attempting to murder someone doesn't cause your head to explode.  But the world would be a better place if... MORE

The Problem of Fraud

Political Economy
Arnold Kling
A reader recommends a paper by William K. Black. "Control fraud" theory explains why the most damaging forms of fraud are situations in which those that control the company or the nation use it as a fraud vehicle. The CEO,... MORE

Boudreaux on Free Trade and Culture

International Trade
David Henderson
The wealth, freedom, and diverse experiences of a commercial culture liberate artists and educators both to be more creative and to cater to the demands of the general population. In a poor society in which only a small elite has... MORE

The Socialist Calculation Debate, 2010 Edition

Austrian Economics
Arnold Kling
Joseph Antos writes, The problem for a government price controller is that he can never know when the price structure is "right." He can know when physicians are unhappy with their prices because they will complain, but that does not... MORE

Mandela and the Communists

Economic History
Bryan Caplan
I'm finding Invictus surprisingly watchable despite its over-the-top depiction of Nelson Mandela as a living saint.  Given my contrarian ways, the movie inspired to search out the inevitably more sordid truth.  The most damning fact on Mandela's public record, in... MORE

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